Key Debate: Conclusions of the European Council meeting 18/19 October 2012

European Parliament/Strasbourg

23 October 2012

President of the Parliament,

President of the European Council,

Honourable Members,

Last week's European Council was the first in a series of three summit meetings this autumn.

Our common objective for these meetings is to reach decisions which will have significant positive impact both on short term stability and our longer term objectives.

First and foremost, we must deliver on the Compact for Growth and Jobs agreed in June.

The reality is that the crisis is still with us: too many of our member states are facing recession; unemployment remains worryingly high, with the potential to further undermine social cohesion. I am painfully aware of the difficult situation in which many European citizens find themselves.

Implementing the growth compact is, therefore, much more than a demonstration of our political will; it is a question of fairness and equity.

In some of our Member States citizens are making major sacrifices because of the situation resulting from excessive debts in the public sector and the irresponsible financial behaviour in the private sector. This is why we need to provide citizens with hope, with a realistic prospect that growth and jobs will return, and that the most vulnerable in society will not suffer.

The Commission has delivered a great number of proposals and inputs to underpin the Growth Compact However, the reality is that this Growth Compact, including an important investment package worth €120 billion, has not yet been fully implemented.

Some progress has been made. But frankly, not enough.

I presented to the Heads of State and Government a detailed report describing what is on the table, where the blockages exist, and what the next steps are. It is high time that proposals on negotiation tables become reality.

Let me give some examples. Agreement is in reach in the next two months on the proposals on venture capital, accounting, and alternative dispute resolution. But work needs to be accelerated on several other proposals that are crucial for growth and fairness in the single market.

Public procurement reform, tax on savings including the mandates for agreements with third countries, professional qualifications, e-signatures: we need to give a new political push in all these areas.

Last week I urged the EU's governments to do their utmost to bring the compact on growth and jobs to life. Likewise, I count on this House to assume its responsibility and to play its part in finalising legislation on its elements.

Let us demonstrate to our citizens that Europe carries a message for growth and jobs.

When talking about growth, it is clear that the financial sector must also make a fair contribution to the recovery. I welcome in particular the recent progress on a European Financial Transaction Tax. Following the requests we have now received from ten Member States, this very afternoon the Commission will make a proposal for a Council decision authorising the enhanced cooperation. This will be the first step in the process. We will also present an action plan on tax fraud and tax evasion, including tax havens before the end of the year.

I also want to confirm to you that following the adoption of the employment package the Commission will before the end of the year introduce a youth guarantee scheme. It will aim to ensure that young people within four months of being unemployed or leaving formal education are presented with either, the offer of a job, continued education apprenticeship or a traineeship. This will be supported by the European social fund. We will also introduce a quality framework for traineeships to help young people in their transition from education to work.

We are taking these measures to prevent a "lost generation" in Europe.

Honourable Members,

It is not just the compact on growth and jobs where we have to turn political will into reality. It is essential that by the end of this year there is agreement on the single supervisory mechanism for banks; this is also a pre-condition for the direct recapitalisation of banks under the European Stability Mechanism.

By reaching agreement on this, the EU has a huge opportunity to restore confidence, to demonstrate its capacity to take difficult decisions in times of crisis, and to send a message of stability. Let us not fail to seize this moment. And let us also be clear about one thing: Reaching agreement on these issues is a fundamental pre-condition if we want to be credible in our further deepening of EMU.

Regarding the Single Supervisory Mechanism for banks, without prejudice to the ongoing legislative process, the European Council confirmed many of the key principles on which the Commission proposals were grounded.

That includes being as open as legally possible to all Member States who want to participate; proper accountability at the level at which decisions are taken - which for the Commission clearly means towards this Parliament; and maintaining the level playing field and the integrity of the single market.

It also includes the tasking of the ECB with responsibility for prudential supervision and the power to intervene, if needed, with any bank in the euro area. And a clear separation of this supervisory function and monetary policy.

In all of these matters we will continue to work closely with the European Parliament.

An important element is the political commitment of the Heads of State and Government that agreement should be reached by the end of this year.

Let's not forget why we are acting. We are advancing in our response to the crisis. We need to definitively break the negative link between bank debt and sovereign debt. This is urgent! That is why the Commission put its proposals on the table within weeks of the June European Council.

Delivering the single supervisory mechanism will give a very important signal to our citizens, our international partners and to investors in general.

The European Council also spelt out the need for the rapid adoption of the provisions relating to the harmonisation of national resolution and deposit guarantee frameworks based on the Commission's legislative proposals on bank recovery and resolution and on national deposit guarantee schemes. It also called for the rapid conclusion of the single rule book, including agreement on the proposals on bank capital requirements

On all these matters this House has a decisive role to play and the Commission will work closely with you in the coming weeks to move ahead quickly

Mr President, Honourable Members,

Before I look at the other, longer term, elements of deepening EMU let me start by underlining how crucial it is to finalise the legislation known as the "Two Pack". The prior co-ordination of national budgets is one important pillar of our crisis response. And it is in the interest of the European Parliament, I would assume, that we incorporate as many elements from the Fiscal Treaty as legally possible into the Community method. And this is what we are doing with the Two-Pack.

Now that the EU institutions and member states have embarked on a reflection process which will cover all aspects of a deeper EMU, including issues of solidarity, I am hopeful that we can agree that the Two Pack goes ahead and not deal with other issues covered by the further deepening of the EMU.

As far as these other aspects of EMU deepening are concerned, the Summit was an occasion for the Heads of State and Government to look in more depth at the issues on the basis of the interim report prepared by the President of the European Council, myself, the President of the European Central Bank and the President of the Euro group. I would like to underline the very useful contributions that the European Parliament and President Schulz have made to this report.

Coming to the next steps, I had already informed this House last month that we will deliver a blueprint for EMU in time before the December European Council. This blueprint will set out the Commission's own thinking on all the building blocks of a deeper genuine EMU.

President, Honourable Members,

Allow me a specific word about the issue of fiscal capacity of an economic and monetary union. As I said already in the State of the Union address, to deliver lasting results, we need to develop a fully equipped Community economic governance, together with a genuine, credible Community fiscal capacity. This would complement our efforts for a stronger and more binding framework for the implementation of key economic policies, in particular in the euro area, as one important means to prevent imbalances.

While much has been done here, for instance through the six-pack and the Country-Specific Recommendations, further steps are crucial to combine specific conditions with specific incentives and to really make economic and monetary union sustainable. One interesting idea in this context is that of contractual arrangements between the Member States and the Commission. Such arrangements could underpin the commitments taken under the Country Specific Recommendations with specific support for their realisation.

We must, however, be clear that this has nothing to do with the decisions on the next Multiannual Financial Framework which we will hopefully be able to take in the coming weeks.

President, Honourable Members,

I want to thank this House for the important contributions and the cooperation with you on all these matters. It is very important to have the views and the involvement of the European Parliament at every stage in this process. We are designing a new system where more decisions will be taken at the EU level. We therefore need stronger accountability. Fixing the accountability at the level where the decisions are taken will be one of the fundamental principles which will guide our discussions on economic and monetary union.

At the same time we need to make sure that more democracy means more transparency not more complexity. Our procedures are already complex enough. Institutions, mechanisms and procedures would make Europe more opaque, less readable and distance us from our citizens precisely at a time when we need to draw closer together.

And there are a few more key principles:

We need to build on the existing institutional and legal framework based on community treaties. We must support the deepening of integration in the Euro area as the basis for strengthening our currency, the Euro. We must ensure convergence between the existing and future Euro area members. And we must respect the integrity of policies conducted at the level of currently 27, soon to be 28, in particular integrity of the Single Market.

President, Honourable Members,

Our tasks are mapped out. Let us not forget that beyond the growth compact, the Two-Pack, and banking supervision, we have other tasks and responsibilities this autumn.

I speak in particular about the MFF. Now I expect those governments who are always speaking about the need for investment to promote growth and jobs to contribute their support for the instrument for investment at the European level. Once again this will be a critical test of our commitment to these policies.

During the summit we sent an important message on Greece. We welcome progress made by Greece and the troika towards reaching an agreement on the policies underpinning the adjustment programme and look forward to the conclusion of the on-going review. The Eurogroup will examine the outcome of the review in light of the troika report and will take the necessary decisions.

We welcome the determination of the Greek government to deliver on its commitments and we commend the remarkable efforts by the Greek people. Good progress has been made to bring the adjustment programme back on track. We expect Greece to continue budgetary and structural policy reforms and we encourage its efforts to ensure swift implementation of the programme. This is necessary in order to bring about a more competitive private sector, private investment and an effective public sector. These conditions will allow Greece to achieve renewed growth and will ensure its future in the euro area.

Finally, the European Council discussed the external dimension of our actions, with a focus on our strategic partners and the need for a pro-active agenda for trade.

It is crucially important that Europe defends its interests in a globalising world. But openness is a vital element to face the challenges of growth and we must not miss out on the opportunities for further trade.

President, Honourable Members,

It is significant at a time when many of our citizens have doubts about the capacity of Europe to meet the challenges we face, that the international community, through the Nobel Peace prize, has sent us a clear message: The world needs a stronger Europe.

It is indeed an honour to have this recognition for the project for integration and unity of this continent which has over 60 years brought us so much. But it is also a responsibility and a challenge for us to show the "courage de chaque jour" - the everyday, mundane, courage - to do the right thing and to take the decisions we need to take.

Through the deepening of economic and monetary union and progress towards political union, let us make sure, together, that the Nobel Peace Prize in 2012 will not be awarded to an idea of the past but to a project of the future.